fbpx Does Sustainable Investing Lead to Lower Returns? | Harvard Kennedy School

Additional Authors:

  • George Serafeim

Excerpt

Does Sustainable Investing Lead to Lower Returns? George Serafeim, January 25, 2018, Paper, "Taking into account the work that the Sustainability Accounting Standards Board has done in identifying material ESG issues, industry by industry, in another study we analyzed more than 2,000 stocks over 22 years and showed that firms improving their performance on material ESG issues, such as on environmental impact in the power sector, workplace safety in the mining sector, and employee inclusiveness in the information-technology sector, have significantly higher future risk-adjusted returns. A negative screening in the oil-and-gas sector would exclude all companies, while an ESG integration approach would take into account how different firms are investing in renewable-energy generation and electric charging stations, dimensions on which Shell and Exxon Mobil, for instance, look very different. [...]we documented that development of ESG funds is driven by marketing goals as opposed to investment logic." Link